(New York, NY - WNYC) The Yankees are in the playoffs after another successful season. But a key part of their stadium operation is a failure: the company that owns the Yankees Stadium parking garages has defaulted on more than $237 million in bonds.
The default means city taxpayers contributed about $39 million in subsidies to a project that is teetering on the brink of collapse. The city also spent $195 million to replace the parkland it gave to the Yankees, some of it now the site of languishing parking structures.
Financial advisor Edward Moran has told the Bronx Parking Development Company, a nonprofit that owns and operates the stadium parking system, that its cash flow can't keep up with its required payments to bondholders. Moran's analysis comes to a grim conclusion: “Unless debt service costs are lowered through a voluntary restructuring, bankruptcy will eventually be BPDC’s only option."
It is the Yankees' fourth season in their 50,287-seat stadium, a season that saw the team win its division while posting the second highest attendance in the major leagues. But the eleven parking lots and garages owned by the BPDC were only 43 percent full--and that's on game days. Other days, they're largely empty.
Most fans have been traveling to games by subway or taking a train to the new Metro-North station near the stadium. Others have looked for street parking or lots with prices lower then the $25 to $48 dollars charged by the stadium lots.
That means less money than expected for the company, which has been drawing from a reserve fund to pay off bondholders. That fund is all but depleted, which has thrown the company into default.
A source with knowledge of the company's finances tells TN that if bondholders can't be convinced to take less than the $15 million they're owed next year, the company is likely to declare bankruptcy. The next payment is due April 1.
Bettina Damiani of the advocacy group Good Jobs New York says Bronx residents tried to warn the city and the team that 9,000 parking spots weren't needed. "If only advocates and residents saying, 'I told you so,' would somehow make this go away," she said. "But the reality is officials and the Yankees refused to have anybody at the table on this decision."
The Yankees wouldn't comment for this story, except to say that the garages are owned and operated by a private company."The Yankees do not run them," spokeswoman Alice McGillion said.
But as TN has previously reported, the Yankees pushed hard in 2008 to add 2,000 parking spots, paving over parts of two nearby city parks to do it, even though the new stadium is smaller than the old one. The team made it a condition for staying in the Bronx.
Then Yankees president Randy Levine assured the City Council that despite the high cost of the new parking system, it would bring in sufficient revenue. "Those revenues will go back to pay the cost of the project and go to the city and a private operator," he said.
That hasn't been the case. Kyle Sklerov, a spokesman for the city's Economic Development Corporation, said that the BPDC owed the city $25.5 million in back rent and taxes as of the end of 2011. The company is obligated to pay its bondholders before it pays the city.
An arm of the city Economic Development Corporation approved the company's business plan before acting as the conduit for $237 million in tax exempt bonds. Sklerov said 5 percent of the corporation's bond issues are in default; the Yankee Stadium parking system has now joined that dubious list.
Marc LaVorgna, a spokesman for Mayor Bloomberg, said in an email that though the city will not be required to pay off the BPDC's debt, "we are going to continue to work with creditors to get the project back onto sound financial footing." He wouldn't give details on how that might be done. He referred TN to the city's Office of Management and Budget, which did not respond to repeated requests for comment.
Marlene Cintron, president of the Bronx Overall Economic Development Corporation, similarly refused comment. When asked whether the BPDC was in default, she said, "I’m not sure what the legal term is at this point in time."
In the meantime, Moran is telling the company that it "needs a dedicated manager and accounting person to control its operations." He also recommends wringing extra money from the parking spots during non-game days by pursuing deals with "circuses, ZipCar and auto dealer parking." BPDC attorney Steven Polivy didn't reply to emails and phone calls.
Damiani said the BPDC's default should be a lesson to the city. "If you're going to take your development cues from a corporation like the Yankees, I think it's safe to assume they don't have the residents' and the taxpayers' priorities in mind," she said, adding that "one of the lasting legacies of the Bloomberg administration, one of its most prominent economic development projects, is going down in flames."
The home games in the Yankees' playoff run will bring in more parking money. But then, the Yankees made the playoffs last year and that didn't prevent the company that runs the stadium's parking system from defaulting on $237 million of city-issued, tax exempt bonds.